May 17, 2019 10:15
Photo : Freepik
Investment management Manulife draws on behavioural economics in the context of an initiative to help advisors keep their clients invested in volatile markets.
In partnership with the consulting firm BEworks, Manulife provides advisors with a box of tools to enable them to better understand the behavior of investors.
Catherine Milum, responsible for sales of wealth management for the division of wealth management and assets in Canada of Manulife, says that the advisers know that to stay invested during periods of market slowdown is logical.
Although this is what they say to their customers, some emphasise the need to obtain liquidity, which has the result that, when the market recovers, they have lost the return that they would have done, ” says Ms. Milum.
“What we’ve done lately on my side of the business is to show a lot of graphics for people. We demonstrate the power to remain invested, giving them a lot of calculation. [But] it doesn’t work. People don’t understand. We use a lot of logic and statistics in order to analyze the behavior of the people, ” she says.
A number of tools for advisors
David Lewis, head of client management at BEworks, indicates that advisers could use a number of tools to help their clients.
One of them is to encourage customers to pre-commit to remain on the market, unless it does drop a certain amount. Another is to encourage customers to put part of their money in savings, regardless of the market. “This can effectively desensitize the volatility” and encourage clients to stay invested, ” explains Mr. Lewis.
Keep his money in investments despite the turmoil in markets is crucial, because people are living longer and that more and more companies are opting for pension plans to defined contribution, ” he recalls.